Perseverance to overcome difficulties at all levels -- A case of equity transfer dispute as an agent
On June 30, 2021, with the settlement payment of RMB 550000 in place, the equity transfer dispute between Bagel's Land Company Limited and Beijing xx Commerce and Trade Co., Ltd. has been fully fulfilled.
The case was filed in March 2018 and completed on June 30, 2021. It took three years and three months for the party to receive the payment. Although it is a less complicated commercial case, the agency process is quite difficult due to the defects of the main body, the defects of the contract terms and the artificial obstacles set by the other party. However, lawyer Huang Jibao, the agent, with his skillful application of the law and his loyalty to the entrustment, persevered in the end, and the other party finally took the initiative to ask for settlement and payment, and the case finally got a good result.
1、 Basic Case
Baiji Times (Beijing) Co., Ltd. is a company that produces "bagel" food. The bagel food is a baked bread originated in Europe and the United States. Baiji once provided bagel bread to western delegations for the Beijing Olympic Games in 2008, and its excellent baking technology and unique flavor formula were unanimously praised.
Baiji is a foreign-funded company, which is solely established by Bagel's Land Company Limited. Bagel's Land Company Limited is a Canadian company. The shareholders and legal representatives of Baiji Company and Bagel's Land Company Limited are both Canadian Chinese Ms. Luo.
In 2016, Beijing xx Trading Company (hereinafter referred to as the Trading Company) transferred the shares of Baiji Company through two share transfer agreements. The first agreement transferred 51% of the shares of Baiji Company for 1530000 yuan, and the second agreement transferred 23% of the shares of Baiji Company for 600000 yuan. During the performance, the trading company only paid 500000 yuan for the first agreement and 250000 yuan for the second agreement, and will not pay any more.
At the beginning of 2018, Bagel's Land Company Limited entrusted Huang Jibao, a lawyer from Zhihuan Law Firm, to defend its rights. After obtaining the entrusted agency formalities of Canadian notarization and certification, the lawsuit began in March 2018. According to the performance period, the first lawsuit was filed in December 2018, and Beijing No.4 Intermediate People's Court decided that the trading company should pay 500000 yuan of share transfer money and 50000 yuan of liquidated damages, which was upheld by Beijing High Court after the appeal of the trading company; In the second lawsuit, in December 2020, the commercial company was judged to have paid 880000 yuan of share transfer funds and 100000 yuan of liquidated damages.
On December 30, 2020, the two parties reached an enforcement settlement. After reducing some amount based on the total amount of the two judgments, the trading company agreed to perform automatically. At present, the amount has been fully performed.
2、 Obstacles in case handling
The case has been handled for more than three years, and the other party has changed four groups of lawyers and vowed to "fight to the end". In the process, the agent went through various legal traps and artificial obstacles, steadily promoted, won the lawsuit, and the two sides reconciled during the implementation process to win real interests for the parties.
（1） It has surmounted the obstacle of the wrong establishment of the subject of the equity transfer contract.
The subject matter of the transfer in this case is the shares of Baiji Company, and the contract should be signed between Baiji Company's shareholder Baigou Company and the transferee's trading company as the main body, but the party concerned mistakenly wrote Baiji Company as the equity transferor. How can I transfer myself? At the time of filing, the manager repeatedly stated that it was due to clerical errors. From the purpose of the contract and the notarization and certification procedures issued by the company, it can be seen that the transferor should be the company, and persuaded the filing court to file the case; During the trial, the judge was guided to ask the other party whether the company was written as Baiji due to clerical errors, which was recognized by the other party and recorded in the transcript, and finally solved the problem.
（2） It has surmounted the obstacle of the other party's counterclaim according to the rescission clause in the contract.
According to Item 9 of Article 5 of the first contract, the trading company has the provisions that "Party A guarantees that the employee salary, social security, and labor contracts of Baiji Company as of December 30, 2016 are paid and signed in accordance with the requirements of the Labor Contract Law..." and Item 1 of Article 7 that "Party B has the right to terminate this agreement, recover the equity transfer payment, and claim damages...", Return the conversion funds and compensate for losses. The agent defends the counterclaim, believing that only some employees have not paid the social security, and the other party has started to operate Baiji since the signing of the equity transfer contract in September 2016, and has not exercised the right of rescission until the time of this lawsuit. The reason is that after the lawsuit by Baigou Company, it was filed to avoid the obligation to pay the share transfer funds, which has exceeded a reasonable period of time and violated the principle of good faith. The court accepted this view and rejected the counterclaim of the other party.
（3） Overcome the obstacle of the other party to file another case in Chaoyang Court.
This case has been under the jurisdiction of the Fourth Intermediate People's Court of Beijing because it involves foreign affairs. The trade company took advantage of the defects of the main body signed by both parties to write Baiji, and sued Baiji with the trade company. When the case was filed, Chaoyang Court reviewed it in the form of a Chaoyang court, and the case was filed because the main body of both parties was domestic capital. After receiving the notice from the Chaoyang Court, the agent submitted to the court the transcript of the court session held by both parties in the Fourth Central Court of Beijing, and clarified that the transferor should be the CUIGUO Company. Both parties have recognized that the trading company intends to conceal the facts, deceive the court, and delay the lawsuit to avoid legal liability. Chaoyang Court found out the facts and ruled to dismiss the lawsuit of the trading company.
（4） It has been a "dissolved" obstacle in Canada to surmount the cuphook company.
In Canada, because there is no regular annual inspection, the legal status of the company is "dissolved". Considering that the company has not gone through the liquidation process, but is conducting a lawsuit to collect the creditor's rights in China, the agent suggested that they translate the word "dissolved" into "revoked" rather than "cancelled". In the first instance, the court held that although the company was in a state of revocation, its business related to settlement was not affected and did not pay attention to this issue. In the second instance, the new lawyer of the trading company made a strong defense against this, and believed that the company did not have the qualification of litigation subject and could not file this lawsuit. The judge of second instance hesitated. In response to this problem, we contacted Ms. Luo in Canada in a timely manner, learned that the company could apply for recovery under the status of dissolved, applied for recovery procedures, and promptly replied the recovery results to the Beijing High Court of the second instance.
（5） It has surmounted the obstacle that the trading company employs a Canadian notary to testify.
In view of the qualification of the litigation subject of Jinguo Company, the trading company engaged Paul, a Canadian notary and sworn officer, to conduct a professional investigation, and reached the conclusion that "Bagel's Land Company Limited was cancelled according to Canadian laws, and the plaintiff was not a legal person or organization, so it did not have the legal qualification to file a lawsuit against the defendant", which was notarized and submitted to the court of second instance. In terms of form, content and nature, the company did not approve the notarial certificate, and the court did not accept the evidence.
（6） It has surmounted the obstacles of malicious capital reduction, increase of shareholders and legal representatives of commercial companies to evade implementation.
In order to avoid execution, the trading company started to reduce its capital during the second trial of the first case. The original legal representative and sole proprietorship shareholder, Mr. Yuan, was changed to the new legal representative, Mr. Li was added as a shareholder, and the registered capital was reduced from 5 million yuan to 100000 yuan. But Li may be a person who has no ability to perform and is not afraid of being classified as dishonest and high limit. Sure enough, after the implementation of the application, the trading company had no property and could only list the trading company as dishonest and limit the height of Mr. Li. The ultimate demand of CUICHOU for equity transfer funds has not been met.
The agent noted that the trading company was a limited liability company solely invested by natural persons when signing the share transfer agreement, and Mr. Yuan was a sole shareholder. According to the spirit of Article 63 of the Company Law and Article 13 of the Provisions of the Supreme People's Court on Several Issues Concerning the Change and Addition of Parties in Civil Enforcement, "a sole proprietorship enterprise as the person to be enforced is unable to pay off the debts determined by the effective legal documents, and the people's court shall support the application of the executor for change and addition of its investor as the person to be enforced", although the trade company has been changed to an ordinary limited company, And the registered capital was changed from 5 million yuan before the change to 100000 yuan, but the signing and performance of the equity transfer agreement occurred before the change. The trading company should be responsible for the applicant in the legal state before the change. Therefore, if Mr. Yuan can not prove that the company's property is independent of personal property, he should be the subject of the case and bear joint and several liability for the company's debts.
For this reason, the agent filed an objection to the execution in the execution procedure, and applied to add Mr. Yuan as the person to be executed, and jointly and severally liable with the trading company. Yuan did not believe that he would lose the lawsuit at the beginning, and luckily escaped responsibility during the execution, but he still could not escape the result of being the executor together with the trading company. The whole process also gave him a series of vivid legal education classes, which prompted him to think rationally. For his future and reputation, he had to entrust his attorney (the fourth group of lawyers) to settle with Huang, and finally reached an enforcement settlement agreement, After the withdrawal of the objection action, CUICHOU successfully got back the equity transfer funds.
3、 Handling experience
On December 30, 2020, in the hearing of the enforcement objection lawsuit, when the two parties reached an enforcement settlement agreement, Zhu Qiuling, the presiding judge of the Fourth Intermediate People's Court of Beijing, said to lawyer Huang, "It is a great honor for the client (referring to the Cuphook Company) to find a responsible attorney like you.". The judges' praise is the recognition and encouragement of our lawyers' agency work, leading us to do a better job in legal agency work and better practice lawyers' professional ethics in the future. This case can achieve the ultimate needs of customers, mainly as follows:
（1） Identify "minefields" and "mine" carefully.
Due to the lack of legal knowledge, the party concerned wrote the transfer subject, Baiji Company, as Baiji Company. If the other party can not let go of this defect, the contract may be invalid. In the court hearing, the agent explained that the purpose of the contract signed by the parties was to transfer and accept the shares of Baiji Company, and the main body should be Baiji Company rather than Baiji Company. He guided the court to ask the other party to confirm the fact that "both parties wrote Baiji Company because of clerical errors", paving the way for the smooth development of the lawsuit.
The legal status of the company is "dissolved". The company is due to the absence of annual inspection. Therefore, at the stage of handling the notarization and certification procedures, the agent requires that the word be translated into "revocation" rather than "cancellation", avoiding the risk that the subject has been written off without the qualification of a litigation subject. Although in the subsequent litigation, the opposing lawyer had a strong fight against this, they were all safe.
（2） File an objection to execution in due time according to the case.
The trading company has maliciously reduced its capital, increased its shareholders, and changed its legal representative. Cuoguo Company has applied for enforcement. The trading company has no property under its name. The court enforcement department can only punish the company and its changed legal representative for breach of faith and high limit, but it has no effect. In this case, the agent timely noticed that when the two parties signed the equity transfer agreement, Mr. Yuan was the sole proprietorship shareholder and legal representative of the trading company. According to Article 63 of the Company Law, "if the shareholders of a one person limited liability company cannot prove that the company's property is independent of the shareholders' own property, they should bear joint and several liability for the company's debts", and filed a lawsuit against the execution of the objection, claiming that Mr. Yuan should bear joint and several liability for this debt, However, the demonstration procedure heard by the court has clearly been able to support the appeal, and Mr. Yuan finally had to comply and actively reach a settlement with the company.
（3） Having identified the right protection path, we will not waver or turn back and stick to it.
The share transfer agreement signed by both parties is the expression of real intention. The sole proprietorship nature of the trading company at the time of signing the contract also provides a path for raising objection to implementation. The acts of the trading company that does not perform the agreement, do not pay the share transfer funds, maliciously reduce capital, increase shareholders and change the legal representative violate the principle of honesty and credibility. Therefore, the legitimacy of the rights protection act also gives the agent confidence and confidence to adhere to. In handling the case, the agent opened the road in the mountains and built bridges in the rivers. In the face of the defense of the other party and man-made obstacles, he did not fear, did not retreat, and insisted on the end. Finally, the case achieved good agency results.
Recently, the agent remitted the equity transfer funds in place to Ms. Luo who was far away in Canada. Soon, Ms. Luo's family, who was in a good mood, went to Calgary for a holiday. She also sent the agent a lot of beautiful sceneries of lakes and mountains and noted: "Thank you, Lawyer Huang.".